Plans for more Bunnings outlets and store openings around Australia are ongoing

HNN Sources

Submissions have been requested from potential bidders for Bunnings' UK-based Homebase chain of stores as it reports on sales for the third quarter; and Bunnings store proposals and openings continue around Australia.

Bids for Homebase as Q3 sales slide

Wesfarmers has asked prospective buyers for Homebase, as part of the Bunnings UK and Ireland (BUKI) business, to submit initial offers, according to a report by Sky News.

Sources told Sky News the conglomerate is putting together a large financial package for any new owner to help contend with BUKI's large losses. The value of the package has not been confirmed but there is speculation it could exceed GBP100 million (AUD184.2 million).

Same store sales at BUKI's fell 15.4% in the third quarter - an acceleration from declines in previous quarters of 15.1%, 11.9%, and 4.3%. Total sales - which includes the impact of opening or closing stores - fell 13.5%. Wesfarmers said sales were impacted by storms in the UK in the quarter which cut foot traffic at Homebase stores. Wesfarmers said:

For BUKI, better execution and improved trading results in the early part of the quarter were offset by unusually poor weather in March 2018, resulting in a decline in total sales of 6.5% (13.5% in local currency terms) for the quarter.

This is in contrast to sales at Bunnings Australia and New Zealand which grew strongly with comparable sales up 7.7% in the quarter, compared to 6% in the same quarter last year, while total sales rose 9.1% compared to 7.4% a year ago.

External consultants

Sky News also revealed that Alvarez & Marsal, a restructuring specialist, has been called in to advise Wesfarmers on alternatives to a sale, including a Company Voluntary Arrangement, a mechanism that would see it closing many Homebase outlets. This would help Wesfarmers cut its financial liabilities.

Investment bankers at Lazard are handling the sale discussions, and its involvement in the review of options for Homebase is notable because of its role in Wesfarmers' purchase of the chain in 2016.

Archie Norman, chairman at British multinational retailer Marks & Spencer, also chairs Lazard's London operation. He has held separate roles with various Wesfarmers operations for years.

Boston Consulting Group have also been tasked to advise the management team at BUKI led by managing director Damian McGloughlin.

Private equity firms, including Hilco, Endless and Lion Capital, as well as bargain retailer B&M, are also considering a bid for the business. It is unclear at this stage whether any bid would be for the entirety of the business, part of it, or in B&M's case, a chunk of Homebase's store estate.

Switching things up

Recently, BUKI completed a change of its tagline from "Lowest prices are just the beginning" to "Your home improvement and garden centre". It has updated all exterior signs to educate UK shoppers about Bunnings' offering.

The retail group said the change is based on customer feedback and that it will still offer low prices, but it wants to show customers what it actually sells through its marketing.

The new management team has also set about rejigging its product range to appeal to British shoppers. Mr McGloughlin told Horticulture Week:

Customer feedback is really important to us and as we continue to establish the Bunnings brand in the UK and Ireland, we are updating our tagline and building signage to showcase our great range of home improvement and garden products. We remain committed to delivering the widest range, best service and our policy of lowest prices, backed by our Price Promise Guarantee.

Plans for more Bunnings stores underway

Bunnings's latest stores are being planned for South Australia, New South Wales, Queensland and Western Australia. The recent fire that destroyed the Bunnings store in Inglewood (WA) has amplified concerns about fire risk for proposed additions to the hardware chain's Balcatta store.

Edwardstown

A former Bridgestone factory in Edwardstown (SA) will be converted into a $45 million Bunnings Warehouse. Building has started and the new Bunnings is expected to open in the first half of next year.

Bunnings general manager - property, Andrew Marks told Adelaide Now the company was still deciding what to do with the former TAFE site just 2km from Edwardstown on Goodwood Road, Panorama, where it had previously planned to build a store.

Mitcham Council's planning panel rejected that project, following backlash from some residents. The Marion store located within the Westfield complex would remain open, Mr Marks said.

Southern Business Connections chairman Greg Garrihy said the Bunnings development will help strengthen Edwardstown's position as an employment hub and help offset manufacturing job losses.

Bunnings hopes to commence construction on its proposed store in Port Macquarie (NSW) soon and anticipates it will be completed in 2019.

The Northern Joint Regional Planning Panel approved an application to modify a bulky goods premises and hardware and building supplies development at 18 John Oxley Drive.

Bunnings is awaiting official documentation from the planning panel which confirms its decision for a Bunnings Warehouse in Port Macquarie. Mr Marks told Port Macquarie News that once confirmed, the Bunnings Warehouse Port Macquarie development would represent an investment of more than $43 million for the land, construction, fit-out and stock.

The new Bunnings store will replace the outlet on nearby Lake Road. The modified application includes re-positioning of each building, floor area changes and minor modifications to the car park.

Kembla Grange

A Bunnings store is proposed for Northcliffe Drive in Kembla Grange (NSW), which will be considered by the regional planning panel. It is set take up almost a third of a 40,000sqm site, with parking for 415 cars included in the plans.

The proposal includes a large roundabout at the intersection of Northcliffe Drive and the Princes Highway, which will eventually form a major access point into residential areas of West Dapto.

Warwick (QLD)

Signs of construction on the Bunnings Warehouse in Warwick (QLD) can be seen the first bricks being laid. The Warwick Daily News reports that a brick wall about four metres high has been built on the Canning Street site, which spans about 7000sqm.

Real estate agent Helen Harm said she did everything she could with the funds available to stop the development. Concern about the potential damage caused by flooding is still on Mrs Harm's mind. She said:

You can't put a two-acre island in the middle of the flood stream and expect nothing to happen, it's unrealistic.

Mr Marks said a design was developed based on a flood report.

As part of the development application for the new Bunnings Warehouse Warwick, a flood report by a qualified engineer confirmed the design requirements for the project. These will be adhered to.

Bunnings is likely to return to Inglewood (WA) following a fire that burnt the Beaufort Street store burnt to the ground in late February. Arson Squad has determined the blaze was not deliberately lit.

Bunnings chief operating officer Debbie Poole confirmed the company was "continuing to work with the landowner to rebuild the Bunnings Inglewood store", according to Community News.

The fire to its Inglewood store has also raised questions about additions to the Bunnings Balcatta outlet. The big box retailer has sought approval from the Metro North-West Development Assessment Panel for various changes including extending its timber trade sales area and enclosing the building materials and landscape yard.

A report by the City of Stirling recommended approving plans for changes to the garden centre, hardware showroom, parking, landscaping and signage but refusing the timber trade and building materials yard additions because of bushfire risk.

The report said the site was in a bushfire prone area and the bushfire management plan and bushfire emergency evacuation plan submitted by the applicant "failed to adequately convey an alternative solution to demonstrate compliance" and had many inconsistencies.

It said there was not sufficient justification for the location of the structures so approving the extension would represent a "high to extreme risk".

Burgess Design Group associate director Mark Szabo presented on behalf of Bunnings and said the changes would increase safety because the open timber sales area would become enclosed and described the fire risk area as "small bush" in a road reserve.

Bushfire behaviour analyst Mike Scott, of Bushfire Prone Planning, also spoke on behalf of Bunnings and told the panel there were "minimal" fatalities from building fires in the past 100 years and the non-combustible materials used in the proposed structure would reduce the risk of a building fire.

Newstead

Construction is about to begin on Bunnings' four level store on Breakfast Creek Road in Newstead (QLD), The Courier-Mail reports.

With a total floor area of more than 17,000sqm over the four levels, the Newstead store will be more than double the size of a typical Bunnings, which generally come in at about 8000sqm.

The mixed-use site, located about 4km from the CBD, will consist of a basement carpark, the main warehouse, outdoor nursery, bagged goods area, cafe and timber trade sales area, and will also feature six street-level tenancies for retail or office space, totalling just under 1600sqm.

Bunnings purchased the original site in 2011 and the initial development application (DA) was rejected in the same year. A revised DA for the new-look store was submitted in 2014 and approved last year.

Western Australia had three new Bunnings store openings while customers were welcomed to individual stores that opened for business in NSW and QLD. The Canberra Airport store is expected to open in late May. The big box retailer is also negotiating with Brisbane City Council about a housing estate in Keperra (QLD) which it believes will have "adverse impacts" on its newly opened warehouse store.

Gregory Hills

Legendary racing driver Dick Johnson helped to officially Bunnings' new store in Gregory Hills (NSW) at the site of the former Masters outlet. The $41 million warehouse store spans over 13,000sqm. Complex manager Ben MacDonald said the Bunnings team had been active in the community prior to the opening.

Keperra

Bunnings' new $40 million store in Keppera (QLD) has opened recently. The 17,000sqm warehouse is one of the retailer's larger outlets, and is almost 30% bigger than its 13,000sqm store in Stafford.

Bunnings has also agreed to meet with Brisbane City Council ahead of a court hearing to resolve the big box retailer's appeal against the Brookfield Residential Properties (BRP) housing estate development which has been approved by the council.

According to the Sunshine Coast Daily, Bunnings lodged an appeal in December, claiming BRP's development would cause "unacceptable adverse impacts" from stormwater entering adjoining lots, and the possible impacts from its business on homes in the development. It also cited conflicts with the rural and extractive industry zones, and said impacts on "local amenity and values" had not been adequately considered and addressed.

We do not believe that Brookfield Residential Properties has properly identified how the proposed residential development will interact with the operation of our newly opened Keperra Warehouse in a compatible way.

There are a number of issues such as lighting and noise impacts that do not appear to have been considered in their submission to Council.

BRP's $313 million plan for the Keperra quarry site includes 700 homes and a 3000sqm shopping centre.

Canberra Airport

Bunnings $42 million store at Canberra Airport is expected to open its doors at the end of May. Mr Marks said the Fyshwick store would remain open and continue to trade as normal.

There are currently four Bunnings stores in the ACT: Fyshwick, Gungahlin, Belconnen and Tuggeranong. The Canberra Airport will be the fifth store.

Wangara

West Coast Eagles footballer Josh Kennedy visited Landsdale (WA) to help open the Bunnings Wangara store. He joined the company's marketing and merchandising director Clive Duncan, operations general manager Debbie Poole, complex manager Marty Hornbuckle and staff at the store's official opening recently.

The warehouse covers over 13,000sqm and includes an indoor timber trade sales area with a four-lane drive-through, flooring display, DIY workshop space, five kitchen displays, four bathroom displays, playground and cafe.

Bayswater

Another West Coast Eagles player Nic Naitanui was guest of honour at the official opening of the new 14,000sqm Bunnings Warehouse in Bayswater (WA) recently. Complex manager Patrick Kelly said his team looked forward to continuing to help community groups in the future.

Mandurah

The new $38 million Bunnings Warehouse Mandurah is located at 21 Kirkpatrick Drive, Greenfields (WA). Complex manager Von Soriano told Community News:

Team members have provided assistance in local community projects such as donating equipment to help reduce safety hazards at the Mandurah Surf Life Saving Club, renovating the outdoor living area for volunteers at the Mandurah Volunteer Fire and Rescue and creating a play area for students from the Peel Development School.